Were you lucky enough to get a pay raise lately? If so, what are you planning to do? Here are 4 tips on how to increase your pay real dividends for you now and in the future:
1) Open a savings account -
Baby Boomers can probably remember parents or grandparents to make regular deposits to a savings account at the local bank. Our savings rate is a measly 2.5% "significant decrease of 7% on average 30 years ago.
For example: If you have recorded a $ 80.00/month raise at the end of the year you have $ 960.00. This is not a huge amount to some, but this is just the beginning. And thanks to the wonders of compound interest, you can watch it grow in a nice nest egg over time, especially if you continue to add new raises your savings.
Savings account interest rates are rising. The online bank, ING Direct currently offers 2.35% APY (annual percentage yield), with no minimum deposit, no fees, and your account is FDIC insured. Visit www.ingdirect.com to learn more about their plans for savings account.
2) Pay down debt credit card
The average American carries $ 2,627 in debt from credit cards, an increase of 14.5% from a year ago, according to Myvesta, a nonprofit consumer education in Rockville, Md.
Fifty-three per cent of credit card companies, just 2% minimum monthly payment, an increase from 43% of companies in 2003, according to the advocacy group Consumer Action Consumer.
Paying 2% less each month due to a balance of $ 2,600.00 at 18.0% interest, should you OVER 35 YEARS to pay, not to mention the $ 6.730 .00 spent on interest costs! Instead, add your $ 80.00 per month to raise the minimum monthly payment will be refunded in 2 years and pay a little over $ 500.00 in interest charges, a huge difference!
Applying your rise toward your credit card debt will lower your debt to income, improve your credit score, and help you get out of the nasty web of debt outrageous credit card.
3) Open or contribute to an individual retirement account (IRA) -
If you have not begun to contribute to a retirement account, you should, and what better time to start your new raise? That's exactly what I did three years ago, but I wish I would have started earlier.
If you rely on Social Security to take care of yourself in your retirement years, it would be better to make the rethink. Few changes to the social security system, we tend to overestimate how much we are going to receive benefits and underestimated how long we live. The only way to bridge this gap is to have income from your own retirement plan to benefit in your "golden age".
An added benefit of opening an IRA is that many companies will match personal contributions to a specified rate. Check with your human resources department to see what plans are available and if your employer will match your contribution.
4) Invest in Stocks, Bonds and Mutual Funds
You do not need thousands of dollars or a diploma of business in order to invest. Neither do you have to hire a broker or financial advisor to own stocks, bonds, mutual funds.
In fact, a company called ShareBuilder is making it easy for those who can afford to make regular automatic investment "to build wealth through long-term investments. 'Www.sharebuilder.com visit to learn more about their simple and affordable, flexible and plans Depending on your budget.
5) BONUS TIP -
Another option, and one that too many of us to choose, is to do nothing other than spending our annual raises. Unless you have had some unforeseen emergency or living paycheck to paycheck, is there any reason to think that you can not get this year on the same salary as last year?
The Federal Reserve estimates that more than 40% of American families spend more than they earn and that no less than 25% of households are not enough savings for the future
Your raise is a unique opportunity for you to invest in the welfare of your finances with the results that we can continue to 'pay' you now and in the future.
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